Asif Latifbhai Khimani, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(4), RAJKOT-GUJARAT

ITA 459/RJT/2014

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7660 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVEE VERMA
• Keywords: Peak credit; Source of fund
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.458 AND 459/RJT/2014 / ASSTT. YEAR: 2008-09 AND 2009-10 ASIF LATIFBHAI KHIMANI 3-NEHRUNAGAR BHIND AMRAPALI CINEMA NR. SAIYAD MANZIL RAIYA ROAD, RAJKOT. VS ITO, WARD - 2(4) RAJKOT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI PRAVEE VERMA, SR.DR / DATE OF HEARING : 26/08/2019 / DATE OF PRONOUNCEMENT: 15/10/2019 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.COMMISSIONER OF INCOME TAX(A)-III, RAJKOT DATED 25.4.2014 PASSED FOR THE ASSESSMENT YEAR 2008-09 AND 2009-10 RESPECTIVELY. 2. FACTS ON ALL VITAL POINTS ARE COMMON IN BOTH THE ASSESSMENT YEARS, THEREFORE, FOR THE FACILITY OF REFERENCE WE TAKE UP THE FACTS FROM THE ASSTT.YEAR 2008-09. 3. REGISTRY HAS POINTED OUT THAT APPEALS FILED BY T HE ASSESSEE ARE TIME BARRED BY 13 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FILED HIS AFFIDAVIT DEPOSING THEREIN THAT AFTER RECEIPT OF CI T(A)S ORDER, IT WAS MISPLACED AND LOST SIGHT OFF. WHEN THE TAX CONSULT ANT REMINDED THE ASSESSEE ITA NO.458 AND 459/RJT/2014 2 ABOUT THE PENDENCY OF THE ISSUE, I.E. APPEAL REQUIR ES TO BE FILED, IT CAME TO THE NOTICE OF THE ASSESSEE, AND HE FILED THE APPEAL. B Y THAT TIME, BOTH THE APPEALS GOT TIME BARRED BY 13 DAYS. 4. ON DUE CONSIDERATION OF THE ABOVE EXPLANATION, W E ARE SATISFIED THAT THE ASSESSEE HAS BEEN PREVENTED BY SUFFICIENT REASON FO R NOT FILING THE APPEAL WITHIN THE TIME. THEREFORE, WE CONDONE THE DELAY, AND PROCEED TO DECIDE THE APPEALS ON MERIT. 5. IN THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS CHALLENGED REOPENING OF THE ASSESSMENT. BRIEF FACTS OF THE CASE ARE THA T THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 25.2.2009 DECLARING TOTAL INCOM E AT RS.1,12,890/-. THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE A CT ON 22.12.2010. THEREAFTER, THE AO GOT INFORMATION THAT THE ASSESSE E HAS DEPOSITED CASH OF RS.23,21,102/- IN SAVING BANK ACCOUNT MAINTAINED WI TH ICICI BANK. THIS BANK ACCOUNT WAS NOT DISCLOSED BY THE ASSESSEE IN H IS RETURN OF INCOME. THEREFORE, THE LD.AO HAS RECORDED REASONS AND REOPE NED THE ASSESSMENT. THE REOPENING HAS BEEN UPHELD BY THE LD.CIT(A). IN RES PONSE TO THE NOTICE OF HEARING NONE HAS COME PRESENT ON BEHALF OF THE ASSE SSEE. 6. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE T HROUGH THE RECORD CAREFULLY. AFTER CONSIDERING THE FACT A SAVING BAN K ACCOUNT MAINTAINED BY THE ASSESSEE WAS NOT DISCLOSED IN THE RETURN, AND THE A SSESSEE HAS DEPOSITED CASH OF RS.23,21,102/- IN SAVING BANK ACCOUNT, WE ARE OF THE VIEW THAT THE LD.AO WAS HAVING SUFFICIENT INFORMATION WHICH ENABLED HIM TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THEREFORE, THERE IS NO FAULT IN REOPENING OF THE ASSESSMENT. THUS, GROUND OF APPEAL IS REJECTED . ITA NO.458 AND 459/RJT/2014 3 7. IN THE NEXT FOLD OF GRIEVANCE RAISED BY THE ASSE SSEE IN BOTH THE YEARS IS COMMON. GRIEVANCE OF THE ASSESSEE IS THAT THE LD.C IT(A) HAS ERRED IN CONFIRMING PEAK CREDIT IN THE SAVING BANK ACCOUNT W ITH ICICI BANK, AND THEREAFTER ESTIMATED NET PROFIT AT 25% OF THE TOTAL TURNOVER. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S DEPOSITED A SUM OF RS.23,21,102/- AND RS.23,77,638/- IN CASH IN SAVING BANK ACCOUNT WITH ICICI BANK IN THE ASSTT.YEAR 2008-09 AND 2009-10 RESPECTI VELY. WHEN THE ASSESSEE WAS CONFRONTED FOR THE SOURCE OF SUCH DEPOSITS, THE N HE HAS GIVEN THE FOLLOWING SUBMISSIONS: 'AT OUTSET, IS RESPECTFULLY SUBMITTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF GAS LIGHTERS ON JOB WO RK BASIS AND MAJOR SOURCES OF INCOME IS JOB WORK RECEIPTS, BESIDES PRO FIT ON RETAIL TRADING OF DEFECTIVE OR REJECTED GOODS. - THE AGGREGATE DEPOSITS IN THE BANK COMES TO RS. 23, 21,102/- AND SUCH DEPOSITS REFLECTED SALE PROCEEDS OF GAS LIGHTERS AS ALSO RE-DEPOSIT OF CASH -WITHDRAWN AT EARLIER OCCASION, EITHER FOR LIQ UIDATING THE TRADING LIABILITY OR TO MEET CONTINGENCIES. THE TOTAL TURNOVER IN RETAIL TRADING OF GAS LIGHTER S WAS TO THE TUNE OF RS.9,06,914/~ AND THE ASSESSEE IS NOT OBLIGED TO MA INTAIN REGULAR BOOKS OF ACCOUNT U/S 44AA OF THE ACT IN RESPECT OF RETAIL TRADING BUSINESS. THE ASSESSING OFFICER HAS, WHILE FINALIZING THE OR IGINAL ASSESSMENT, CONSIDERED THE EXPLANATION AS ALSO APPLICABILITY OF THE PROVISIONS OF SECTION 44AF OF THE ACT AND ESTIMATED THE NET PROFI T, WHICH IS ACCEPTED BY THE ASSESSEE AS WELL. IT IS EMPATHIZED THAT THE PROFIT ON RETAIL TRADINGS OF GAS LIGHTERS REMAINED TO BE OFFERED FOR TAX DUE TO INADVERTENT M ISTAKE AND THE LAPSE WAS INNOCENT AND THERE WAS NO INTENTION TO ESCAPE T HE TAX LIABILITY. THE LAPSE WAS HUMAN ERROR. THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF AC COUNT IN RESPECT OF HIS RETAIL TRADING BUSINESS AND THE VERY FACT WA S EXPLAINED DURING ITA NO.458 AND 459/RJT/2014 4 THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, WHERE AS PROVISIONAL ACCOUNTS WERE FURNISHED. THE ASSESSEE IS NOT IN A POSITION TO FURNISH THE RE QUISITE DOCUMENTS FOR HIS RETAIL TRADING BUSINESS IN GAS LIGHTERS AND THE SOURCE OF DEPOSITS IN ICICI BANK WERE SALE PROCEEDS THEREOF AS EXPLAINED DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. IT IS HOPED THAT THE CLARIFICATION; EXPLANATION AND DOCUMENTS WILL SUFFICE THE REQUIREMENTS. IT IS, THEREFORE, REQUEST ED THAT THE RETUNED INCOME MAY KINDLY BE ACCEPTED AND REFRAIN FROM MAKI NG THE PROPOSED ADDITION AND JUSTICE BE DONE. 9. THE LD.AO WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE TO THE EXTENT THAT THIS ACCOUNT WAS BEING USED BY THE ASSE SSEE FOR DEPOSITING TRADING RECEIPTS FROM GAS LIGHTERS, BECAUSE THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF MANUFACTURING ON JOB WORK BASIS. THE LD.AO HAS OBSERVED THAT PEAK CREDIT AVAILABLE IN THIS ACCOUNT BE ADDED TO THE TOTAL INC OME OF THE ASSESSEE IN BOTH THE YEARS. HE MADE ADDITION OF RS.8,03,773/- IN TH E ASSTT.YEAR 2008-09 AND RS.8,37,238/- IN THE ASSTT.YEAR 2009-10. HE ALSO M ADE ADDITION OF RS.633/- AND RS.2,869/- ON ACCOUNT OF INTEREST IN THE ABOVE BANK ACCOUNT. ON APPEAL, THE LD.CIT(A) HAS OBSERVED THAT THE AO SHOULD ADOPT 25% AS PROFIT ON TURNOVER IN THIS ACCOUNT FOR BOTH THE YEARS. HE FO UND THAT PEAK CREDIT IN THE ASSTT.YEAR 2008-09 WAS OF RS.2,48,833/- AND RS.2,53 ,873/- IN THE ASSTT.YEAR 2009-10. APART FROM THIS PEAK CREDIT, THE LD.CIT(A ) FURTHER CONFIRMED 25% ESTIMATED PROFIT ON THE ALLEGED DEPOSITS IN THE BAN K ACCOUNT, AND HE WORKED OUT ADDITION OF RS.,5,80,766/- AND RS.5,94,410/- IN THE ASSTT.YEARS 2008-09 AND 2009-10 RESPECTIVELY. IN THIS WAY, THE LD.CIT( A) HAS CONFIRMED THE ADDITION OF RS.8,29,109/- AND RS.8,48,283/- IN THE ASSTT.YEAR 2008-09 AND 2009-10 RESPECTIVELY. THIS METHOD OF COMPUTATION O F INCOME HAS GIVEN RISE TO A LITTLE ENHANCEMENT IN THE ASSTT.YEAR 2009-10. BUT NO SHOW CAUSE OF NOTICE WAS ISSUED BY THE CIT(A) FOR ENHANCEMENT OF THE INCOME. ITA NO.458 AND 459/RJT/2014 5 10. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY. ON DUE CONSIDERATION OF THE ABOVE FACTS , WE FIND THAT THE LD.REVENUE AUTHORITIES ARE UNANIMOUS QUA ONE ASPECT THAT THIS SAVING BANK ACCOUNT WAS OPENED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS. HE HAS DEPOSITED THE TRADE RECEIPTS IN THIS ACCOUNT. THEY HAVE ACCEPTED IT AS A FACT THAT TRADE RECEIPTS HAVE BEEN DEPOSITED IN THIS ACC OUNT AND IT WAS USED FOR MAKING PAYMENT FOR PURCHASE OF RAW-MATERIAL. OTHER WISE, TOTAL CASH DEPOSITS MIGHT HAVE BEEN ADDED AS UNEXPLAINED INCOME OF THE ASSESSEE. ONCE THE ASSESSEE HAS ADMITTED IT THAT HE WAS TRADING IN GAS LIGHTERS AND HIS TURNOVER WAS LESS THAN RS.40 LAKHS, THEN ASSUMING THAT GROSS DEPOSITS IN THE SAVING BANK ACCOUNT AS TRADE RECEIPTS, THE PROFIT RATE PRO VIDED UNDER SECTION 44AF OUGHT TO BE ADDED, AND ACCORDINGLY, INCOME OF THE A SSESSEE IS TO BE ASSESSED. THUS, THIS GROUND OF APPEAL IS PARTLY. WE DIRECT T HE LD.AO TO COMPUTE PROFIT ON THESE DEPOSITS AT THE RATE PROVIDED IN SECTION 4 4AF OF THE ACT. 11. IN THE RESULTS, BOTH THE APPEALS OF THE ASSESSE E ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 15 TH OCTOBER, 2019 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 15/10/2019